The St. Francis Chapel building is slated to undergo a $17-million transformation that could begin by this fall.

THE PROVIDENCE JOURNAL / Glenn Osmundson Glenn Osmundson

PROVIDENCE — Yet another hotel is coming to downtown Providence, this one a mid-price offering in what is now a Franciscan chapel at 58 Weybosset St.

Fall River developer James Karam is partnering with Granoff Associates to convert the 11-story building into a 115-room hotel, with rooms averaging $150 to $175 nightly. The project will cost an estimated $17 million, and the developer hopes to start work this fall and open the hotel in the fall of 2008.

Karam has been trying to get into the Providence market for some time, and the Granoff-owned building allowed the former University of Massachusetts board chairman to strike a deal.

“We’ve been looking for at least two years in the downtown area of Providence,” Karam said.

“We think there’ve been some great luxury hotels that have been built there,” Karam said, but he added that their studies had found that the mid-price market was not being served. This hotel should appeal to parents visiting their college-age children, and to businesses that don’t want to pay top dollar for employees on business trips.

“We think we’re ideally located for a lot of the companies that are more value-conscious,” Karam said.

Karam would not yet release the brand of the hotel. More details will be made available at a news conference this morning, he said.

He said it would be a nationally recognized name, and would be a limited-service hotel.

“It’ll have all the bells and whistles of a normal hotel, but it will not have large banquet rooms … or the restaurants,” Karam said.

It will have a pool and exercise room, however, and small meeting rooms.

“We also think we’re a great asset to the convention business,” Karam said, noting that many mid-price conventions are forced to rent rooms in Warwick or other locations outside Providence because the city’s rooms are so expensive. The average daily rate in Providence was $154 last year, according to statistics from the Providence-Warwick Convention & Visitors Bureau.

The local Franciscan order’s administration will move to the Church of St. Mary, on Broadway, while the order will establish a new chapel in a building at 275 Westminster St. It expects to start services there by June 20, according to the chapel newsletter.

The chapel building was erected about 75 years ago as the Old Colony Bank Building. The Franciscans took it over in 1994.

In addition to the Franciscans’ administration and the friars’ residences, the building housed several floors of lawyers’ offices.

Evan Granoff and Granoff Associates bought it in February 2006 for $6.55 million.

Because it is a historic renovation project, the developer intends to seek state historic tax credits. He does not plan to ask for any city tax deal.

The tax-credit program for historic renovations has come under fire recently as being too generous and costing the state too much in deficit times, but Karam expects that he can qualify for it before the program is changed.

“I certainly think we’ll be in the queue soon enough. This is a project that’ll create a lot of construction jobs,” he said.

Karam says hotels are great projects because they contribute both property taxes and the 1percent hotel tax to state and city coffers.

“They’re a big profit-maker for the state and for the city,” Karam said.

Karam’s partner, Granoff Associates, owns real estate all over Providence, and is a partner in the 110 Westminster hotel and condo-tower project planned for across the street. The company also owns The Arcade, The Arcade Parking Garage, and a parking garage behind the chapel building, which the planned hotel will use for parking.

Karam’s First Bristol owns four other hotels, a Marriott Residence Inn and a Hampton Inn in Middletown, and Hampton Inns in Raynham and Norwood, Mass.

dbarbari@projo.com